Sri Lanka gets USD 2.9 billion conditional bailout from IMF

Sri Lankan President Ranil Wickremesinghe said on Monday (March 20) that the International Monetary Fund (IMF) has approved a bailout request worth USD 2.9 billion. This has raised hopes of easing the crisis in the island nation. The IMF board has also confirmed that the loan has been approved. However, the IMF, on Tuesday said thatrescue was conditional on tackling the deep-rooted culture of corruption andgovernment mismanagement.

"I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda," President Ranil Wickremesinghe said in a statement.

Meanwhile, Peter Breuer, the IMF mission chief in Sri Lanka has assured that thegovernment has agreed to enact tougher anti-corruption laws in the upcoming months.

"We emphasise the importance of anti-corruption and governance reforms as a central pillar of the programme.They are indispensable to ensure the hard-won gains from the reforms benefit the Sri Lankan people", saidBreuer.

In April 2022, Sri Lanka defaulted on its foreign debt and plunged into its worst economic downturn since independence because of a shortage of foreign currency.

The Indian Ocean nation of around 22 million people ran out of cash to finance even the most essential imports, causing massive social unrest.

Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines, and runaway inflation forced president Gotabaya Rajapaksa to flee the country and resign in July.

Rajapaksa was replaced by Wickremesinghe as president who has implemented tough spending cuts and tax hikes in an attempt to secure the IMF assistance.

There was a long delay to the IMF approving the package because it took time to secure financial assurances from China, Sri Lanka's largest bilateral lender.

Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka, but the concession fell short of IMF expectations for the sustainability of the island's debt.

(With inputs from agencies)

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